TPR powers enhanced in Pensions Bill

By Jack Gray14/10/19

The newly announced Pensions Bill proposes that The Pensions Regulator (TPR) has its powers strengthened to help tackle irresponsible employers and protect savers.

If passed through parliament, the bill will give TPR the powers to better respond to employers not taking their pension responsibilities seriously, excessive shareholder payments at the expense of pension contributions and to obtain relevant information about schemes in a timely manner.

It will strengthen the regulators powers and the existing sanctions regime, including introducing new criminal offenses and taking tougher action against those who fall foul of pensions law.

Furthermore, with the announcement of the framework for the pensions dashboard in the bill, the regulator will have new powers to ensure that relevant schemes provide accurate information to consumers.

TPR chief executive, Charles Counsell, said that it “welcomed” the new measures, which will allow the regulator to continue in its commitment to be “quicker, clearer and tougher”.

“The bill would give us the power to set and enforce clearer scheme funding standards in defined benefit pension schemes while also providing early warning of potential problems,” he added.

“Where problems do arise, new criminal sanctions and civil fines will act as a strong deterrent against risky and reckless behaviour, giving us flexibility to issue fines at the appropriate level, depending on severity.”

AJ Bell senior analyst, Tom Selby, said that the increased punishments for irresponsible employers “comes in response to a series of high-profile corporate failures – most notably BHS and Carillion”.

Baker McKenzie pensions partner, Jonathan Sharp, questioned whether the regulator would be willing to exercise its powers to their full extent.

“The big question is whether the new penalties will have the desired deterrent effect in practice. They may not if TPR is unwilling or unable to pursue successful prosecutions in practice,” he stated.

“The regulator has historically been reluctant to exercise its powers unless it is confident that it can meet any potential challenges to the exercise of those powers.”

However, Sharp said that he believed other changes to TPR’s powers would have a bigger impact.

He continued: “Some of the expected changes, such as the new requirement for companies to explain to pension scheme trustees the impact which transactions will have on any defined benefit pension schemes, will impact M&A activity, particularly at the planning stage.”

Hargreaves Lansdown head of pensions policy, Tom McPhail, concluded: “Regulatory powers in the Bill will give TPR more powers in taking to task employers who may be neglecting their final salary schemes in favour of paying dividends out to shareholders.

“It will help strengthen the protection of employees guaranteed pensions, and hopefully cut down on the kind of scandals such as we’ve seen with BHS and Carillion in recent years.”